KBC Group: KBC's capital remains well above the new minimum capital requirements

Core Viewpoint - KBC Group's minimum capital requirements have been adjusted by the European Central Bank (ECB), resulting in a slight decrease in the fully loaded CET1 requirement for 2025 from 10.88% to 10.85% [1] Group 1: Capital Requirements - The new CET1 requirement includes a Pillar 1 Requirement of 4.50%, a Pillar 2 Requirement (P2R) of 1.10%, a capital conservation buffer of 2.50%, and an O-SII capital buffer of 1.50% [1] - The overall CET1 requirement also factors in future changes to countercyclical capital buffers (1.15%) and a sectorial systemic risk buffer (0.10%) [1] Group 2: Pillar 2 Guidance - The Pillar 2 Guidance (P2G) has been reduced to 1.00% from 1.25% as a percentage of Risk-Weighted Assets (RWA) [2] - KBC Group's unfloored fully loaded Basel 4 CET1 ratio at the end of Q2 2025 is projected to be 14.6%, significantly exceeding the new CET1 requirement [2] Group 3: P2R Adjustments - The P2R for CET1 has been impacted by the ECB's decision to increase it to 1.95% from 1.75% [3] - The removal of the P2R add-on related to old non-performing loans (NPLs) has allowed KBC to deduct the remaining shortfall from CET1 as of Q2 2025 [3]